Marketing budgets revised up for the first time since Q1 2005 as business conditions improve

The Q3 2006 Bellwether Report, the quarterly survey of marketing spend, published today (16th October 2006) reveals a modest upward revision to marketing budgets, marking an end to the consecutive budget cuts seen over the past five quarters.

03/01/2008

The Q3 2006 Bellwether Report, the quarterly survey of marketing spend, published today (16th October) reveals a modest upward revision to marketing budgets, marking an end to the consecutive budget cuts seen over the past five quarters. Internet advertising and direct marketing saw the strongest gains, whilst traditional media budgets fell again.

The survey shows business confidence towards marketing picking up throughout the year, with the rate of decline easing in the first two quarters of 2006 before showing a modest rise in Q3. Yet despite the latest upward revision, 2006 is set to see the weakest growth of marketing spend since 2002.

Highlights of the Q3 2006 report:• Initial budgets for traditional media were revised down for the eighth consecutive quarter, however the rate of decline slowed for the third consecutive quarter• Internet marketing budgets continue to outperform all other sectors, with strong gains similar to those seen in previous quarters• 11.5% of companies now allocate more than 15% of their total budget to internet marketing, a figure which has more than doubled since 2000• Direct marketing budgets have shown the largest gain for a year-and-a-half, increasing its share at the expense of traditional media budgets

Chris Williamson, Bellwether Report author, NTC Economics: "The latest Bellwether data suggest that a recovery in marketing spend, and in particular adspend on main media, may be stronger in the second half of 2006 than many are current expecting. This is not altogether surprising; corporate profitability is currently at a 40-year high, meaning funds available to marketing departments have risen more than many companies were expecting at the start of the year."

David Pattison, IPA President, Chief Executive, PHD: "The report paints an interesting picture of a modest rise in Q3 as business confidence in marketing has increased. The growth is driven predominantly by direct marketing and internet advertising at the expense of the more established media sectors, continuing the trends that we have seen over the last 18 months. Whilst any upturn is to be welcomed, the bigger picture is that 2006 is set to see the weakest industry growth since 2002."

Sir Martin Sorrell, Chief Executive, WPP: “It is good to see prospects improving as in other Western European markets like France and Germany. Direct and internet continue their strengthening trend, driven by new technologies."

The Bellwether report contains detailed analysis of the UK’s marketing economy, based on a survey of 250 companies, representing all key business sectors.